Important advances have been made recently in understanding molecular mechanisms that control development of pancreas. In spite of this progress, the identity of putative pancreatic stem and progenitor cells remains largely unknown. Based on the results in rodent pancreatic regeneration models, it has been suggested that stem and progenitor cells persist in the pancreas after birth. It has been hypothesized that these cells are responsible for maintaining islet cell mass under normal conditions as well as under conditions of pancreatic damage. Because current experimental models do not provide access to substantial quantities of cells during pancreatic development and regeneration, it is difficult to directly verify the existence of pancreatic stem and progenitor cells. We propose that an efficient in vitro pancreatic differentiation system would facilitate progress in this field. We have developed in vitro pancreatic development system, which utilizes adult mouse pancreatic tissue to generate glucose responsive endocrine hormone producing islet-like cell clusters (ILCCs). In addition to ILCCs, neural cell types are efficiently generated. Among neural cell types, we detect an abundant population (which we refer to as pancreatic neuroepithelial, PNE cells) with phenotypic characteristics of neuroepithelial/radial glial cells of embryonic central nervous system (CNS). Also, an array of pluripotent embryonic stem (ES) cell and multipotent stem cell-specific mRNAs are induced during the culture. The number of PNE cells and the level of expression of stem cell markers peak before ILCC differentiation and fall sharply at the end of the culture. These results suggest that a stem cell population with pancreatic and neural differentiation potential is generated during the course of these adult primary pancreatic cultures. We are currently using cell surface marker based cell fractionation approaches, as well as gene transfer and lineage tracing analysis, to characterize the nature of putative stem and/or progenitor cells giving rise to pancreatic and neural cells in this system.